Interim Eels boss Max Donnelly could well be presiding over the Parramatta Bears had he not blocked a push to merge the Eels with foundation club North Sydney.

Donnelly was the voluntary administrator of the North Sydney Rugby League Club when financial difficulties forced it out of the NRL competition at the end of 1999. The Bears, desperate to remain in the top grade, looked at suitable merger partners and considered Newcastle before ultimately entering into the ill-fated venture with Manly that produced the Northern Eagles.

However, before getting in bed with the Sea Eagles, the Bears considered overtures from Parramatta about forming an alliance. Long-time Eels chief executive Denis Fitzgerald, the self-proclaimed "Emperor of Parramatta", put a proposal to Norths powerbrokers that could well have changed the course of rugby league history.

However, Donnelly would have none of it.

"Denis Fitzgerald was only interested in a takeover, not a merger, at the time," Donnelly told Fairfax Media.

"Parramatta were a financially very powerful club and they didn't need a merger, they may have had one if they could gain something out of it. I guess that's what Denis Fitzgerald was after at the time.

"The Bears' boundaries were [with] Parramatta because they stretched right up to the north shore, up at Waitara, and that linked onto the back of Parramatta's territory. The Bears' natural merger partner was either Parramatta or Manly or Newcastle, although Newcastle were never really interested.

"From memory, Parramatta wouldn't agree to even one game at the Central Coast or North Sydney Oval. It was a complete takeover – they said 'we'll take over, take your players, take on your liabilities, but we won't compromise a game or do anything'.

"It wasn't like I was in a great bargaining position – I had an insolvent club, as opposed to Parramatta. So the only place I could merge with was Manly and the league gave us $9 million. That fixed Manly's problems, Norths' creditors got paid and the Northern Eagles got some funding to start with and the clubs could fund it 50-50."

While the Northern Eagles were wound up in 2002, Donnelly has the utmost confidence in Parramatta's long-term future. Its leagues club is trading strongly, he has appointed leagues club chief executive Bevan Paul as the interim boss of the football club – "we've agreed to 30 days but that may end up being 60" – and the search is underway for a new Eels board, chief executive and football manager.

Donnelly will oversee the transition after being appointed temporary administrator of the leagues club and, subsequently, the chairman of the football club. He has been impressed with the ability of Brad Arthur to insulate his team from the seemingly endless crises plaguing the Eels and indicated he was keen to retain the coach beyond his current contract, which expires in 2017.

"My personal view – and he is contracted until next year – is that you'd want to leave him on," Donnelly said.

"Maybe that's something I should be leaving to the new CEO and the board. But having said that, I can't defer things that need to be done. We have a playing roster that goes up and goes down, so you've got to keep trading like normal.

"I think the coach has done an amazing job. I've only met him this week. Before I'd met him, just as an observer of rugby league, he seemed to be doing an amazing job.

"You look at what happened at Cronulla. It was a totally different problem, but it was still a club-based problem and they ended up with the spoon."

On Tuesday, at the invitation of Arthur, Donnelly will address the players for the first time. Asked what message he will deliver, the veteran executive said: "I can imagine I'd introduce myself, tell them about the changes to the board, tell them nothing changes.

"There might be less people in the dressing room. Just do what your contract says and the line of communication doesn't change, it's just a different board. It shouldn't affect the players at all.

"Somehow, [countless scandals] don't seem to have affected the players in terms of performance. When they go out on the field, I don't think they're thinking about the board. I hope they're not."